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[00:00:07] The Dirt PodKast:
Welcome to The Dirt, an economics podcast bringing you the down and dirty agronomic science behind growing better crops and bigger returns. Backed by nutrien-economics.com, we break down the latest research, news, and insights to help farmers make better business decisions. Let’s dig in.
[00:00:31] Amy Crozier:
Hello, and welcome back to the Dirt Podcast. I am your host, Amy Crozier, senior marketing representative with Nutrien. We are broadcasting live today from Egg and Motion, Western Canada’s biggest outdoor farm show. And joining us is one of our favorite guests, Jason Newton. He was with us in March and talking about crop commodity prices, input prices, and we are gonna dive into what’s changed since March until now. Jason, for those that don’t know you, why don’t you take a moment and just tell them a little bit about who you are, what you do, and where you’re from.
[00:01:04] Jason Newton:
Thanks, Amy. Happy to be back on the dirt again. It hasn’t been that long, and a lot is happening in the markets. I lead the market research team at Nutrien, which is analyzing fertilizer and agricultural fundamental supply and demand and prices, as well as customer analytics and the atmospheric science areas as well.
[00:01:23] Amy Crozier:
We wanna start with just the big picture. What is happening in the market? What factors are driving commodity and input prices? And what’s changed from now into when you were on in March?
[00:01:33] Jason Newton:
A lot of similar factors to talk about driving energy, agriculture, and fertilizer markets today, as was the case in March. It’s probably important to timestamp the day of we are at. It’s July 22nd today. And we’ve seen a re-escalation of the war in Iran and a closure of the strait of Hormuz again, which is impacting energy markets and fertilizer markets today. We’ve seen since the end of June, bottoming of energy prices, crude oil prices are up over $20 a barrel from where they bottom. We’re also in a seasonal weather market with commodity prices, and we’ve seen strength in major row crops in North America, foreign, wheat, soybeans, canola. All of those prices have increased over the last few weeks as it’s been really dry in Europe. There’s been heat and dryness in the US Midwest. And if we look at the energy markets, there’s also strength in energy markets, which from a demand perspective in biofuels is supportive for vegetable oils.
[00:02:31] Jason Newton:
And so palm oil prices, canola prices, soybean prices, all strengthening because of that. We’ve also seen volatility in fertilizer, specifically in nitrogen with the typical seasonality and demand and the opening up of the Straita Hormuz. In addition to seasonal availability from China, we’ve seen exports of urea improve and prices come down, but those have rebounded again since the end of June as well. Phosphate continues to be impacted by high raw material costs resulting in tight supplies, also tight supplies and higher prices, and potash is relatively stable. We’re in a season where we see a lot of volatility in crop prices, and that’s driven by weather. We’ve seen heat and dryness and high temperatures in the forecast drive volatility. Already, we’re at contract highs for canola and soybeans. Today, again, July 22nd, we crossed $5 per bushel for new crop corn. All relatively positive driven by the weather conditions that we’re seeing in addition to really strong demand.
[00:03:31] Jason Newton:
And that’s led to tighter supply and demand balances as we look forward to the 2026, 27 year, even at trend yields. The other factor to watch from a crop production perspective is the developing El Nino. And that has the potential to lead to drought and dryness in Asia. And as a result of that, that could lead to more tightness as we move forward as well.
[00:03:52] Amy Crozier:
Back in March, you said the USDA said they need 95 million acres of corn in order to meet demand. How is that shaping out? What’s the outlook on the corn demand right now, and what happened from then till now for planting and expectations of yields?
[00:04:07] Jason Newton:
We went through a relatively favorable planting season throughout North America. And as a result, it’s one of the rare times, actually, where the June acreage report that came out at the end of June was very similar in acreage as what was out in the prospective plantings report in March. Roughly 95 million acres of corn, 85 million acres of soybeans. When we spoke last time, said you need roughly 95 million acres of corn at trend yields to match where the USDA was projecting demand. What’s happened since then is the USDA has increased its demand forecast. We actually need above trend yields at 95 million acres to balance demand. And as a result, they’re forecasting tighter supply and demand balances, which is one of the factors that’s been supportive of prices over the last few weeks.
[00:04:51] Amy Crozier:
And is that being impacted from South America? I know they had a late-seeded supreme corn crop. Is that impacting that?
[00:04:58] Jason Newton:
It’s definitely created some volatility. They’re about half done harvest of the Suprenia corn now, and for the most part, strong production in some regions has offset the dryness and production challenges that they’ve had in others. The forecast for Supremia corn production in Brazil is relatively stable. That’s not had as large of an impact as something like the drought in France, for example, where corn conditions are at their lowest levels in more than a decade. And that’s one of the factors that’s impacted the market.
[00:05:25] Amy Crozier:
When we’re talking about fertilizer and these record crop yields that we’re looking for above average crop yields, we talked about potash and how we’re seeing more of the soil tests. And what’s coming out is that we’re removing more potash than we’re putting back in the ground. What does that look like for the potash market?
[00:05:42] Jason Newton:
We’ve seen, if we go back to last fall, relatively narrow application window in North America. We saw a reduction in fall applications as a result of that. We saw relatively stable demand in the spring, but still, if you think about application rates, probably down versus normal levels. So continuing to see a withdrawal of nutrients from the soil. One of the things that is important to watch as we go forward is what the potential yield impacts of nutrient deficiencies is in major growing regions internationally. It’s pretty difficult to call, and of course there’s a number of factors, including weather that are important to watch, but that’s something to keep an eye on.
[00:06:20] Amy Crozier:
Yeah. Farmers are always watching that price volatility and what their budget is, what their profitability is on those acres, and figuring out where the best place to put their money. And when we’re talking about volatility, why don’t we go through the nutrients and we’ll start with nitrogen. You mentioned before about the gas prices, conflict in the Middle East. How is that affecting the nitrogen market?
[00:06:44] Jason Newton:
We’ve seen a lot of volatility in nitrogen across all products. And I mentioned at a high level, the urea market. And we saw really as the Northern Hemisphere spring application season was coming to an end, and it looked like supplies were going to start moving from the Middle East. In addition to the one thing we didn’t know in March was what the Chinese export policy would be on urea, and that became public knowledge. All of those factors combined put a lot of downward pressure on urea prices. We saw a pretty solid reset as we got past the spring application season. Similarly, we saw that with ammonia. We saw that seasonally demand started to be reduced. Ammonium phosphate production is a key end user of ammonia, and we know that those operating rates declined, which had an impact on demand. And you had the supply from the Middle East coming on stream and led to a reset in ammonia.
[00:07:31] Jason Newton:
And UAN followed those after the spring application season occurred. Since that time, we’ve seen international prices start to increase as seasonally you see an improvement in demand after demand was all s- standing back and waiting for some stability in the market. And in North America, we’ve seen prices, the NOLA benchmark increase from a low of $340 a ton to the high end of the range. Yesterday was $430 a ton, a $90 increase in urea prices since the end of June. Similarly, we’ve seen some improvement in UAN prices since market bottomed earlier in this month.
[00:08:07] Amy Crozier:
You mentioned that ammonia is a feedstock into making ammonium sulfate. So let’s dive into the ammonium sulfate market. What should we be watching when we’re talking about sulfur?
[00:08:16] Jason Newton:
Uh, break out the sulfur outlook from ammonium sulfate. And we’ve seen, even though sulfur component of ammonium sulfate is there from an agronomic perspective, we’ve really seen the ammonium sulfate market follow urea for the most part internationally. And that volatility in urea is probably the most important thing to watch. So think about the sulfur outlook. 50% of the sulfur globally trades through the Middle East. And as a result of that, we’ve seen really high prices. Sulfur prices today for international export markets are above $1,000 per ton. If we look at the 10-year average, it’s $144 a ton. Well above historical levels for MAP, it’s about 50 cents on the dollar increase in cost of production from that. We’ve seen, because of limited supplies, and in some cases economics, operating rates of producers in China, in the US, in Morocco be reduced in addition to the reductions in the Middle East because of the sulfur supply constraints.
[00:09:12] Amy Crozier:
With phosphate, phosphate is deficient in Western Canada. I know there’s deficiencies throughout the states. What can you get farmers to look at? We can’t cut back. We’ve already cut back. Prices have been high for a while. What should we be looking out for when we’re thinking about phosphate?
[00:09:26] Jason Newton:
It’s really challenging because there is a lot of uncertainty with respect to the outlook for the raw materials. And we know internationally that the application economics are not positive. You are gonna see cutbacks in demand, and we have seen that really since 2021 internationally because of Chinese export restrictions that we’ve seen cutbacks in applications. I think it’s a matter of looking for opportunities, staying in touch with your trusted advisors and looking for opportunities to position phosphate using products that improve phosphate efficiency and uptake as well. But as we look at the outlook, especially on a short-term basis, just the raw material costs and the tight supplies, the supply demand balance for phosphate will continue to be tight.
[00:10:10] Amy Crozier:
Should we be looking right now to secure our phosphate? Do you think that we’re gonna have adequate phosphate going into the spring? Is one question here at the show this week we’ve had farmers asking us what should they do when they’re buying some of their nitrogen right now? What should they be doing for their phosphates?
[00:10:25] Jason Newton:
It’s a good question. I think similar to how we think about marketing crops, I think potentially looking at opportunities to lock in portions of what you need, knowing that North America, for the most part, is relatively self-sufficient from a phosphate production perspective. Actual available supply shouldn’t be an issue, but it’s a matter of the underlying global commodity price volatility and looking for opportunities to take a position. I mentioned the thousand dollar sulfur prices. We know historically sulfur can be really volatile. The current pricing and cost production dynamics are not sustainable. At some point, that will correct, assuming that shipments begin to normalize. And at that time, the cost production can go down, operating rates might go up, and the supply situation could improve. It’s a matter of really paying attention to the market dynamics and looking for opportunities where there is supply available and positioning, uh, accordingly.
[00:11:16] Jason Newton:
Yeah.
[00:11:16] Amy Crozier:
Heading into the fall, what are you watching when it comes to input and commodity prices?
[00:11:20] Jason Newton:
I think as we look toward fall, the next 30 days from a crop production standpoint, the Northern Hemisphere is really important. The crop price volatility that results from what the crop production looks like will be really important to watch. We know that there has been dryness in the US Midwest. Crop conditions have been pretty resilient, but keeping an eye on those, I think, will be an important driver. As we move further a couple months out into September, we’ll start to see Brazilian planting. And there is a tendency with El Nino for the start of the rainy season in Brazil to be delayed. There is potential for volatility to emerge in crop prices if that planting is delayed for both soybeans and corn. That’s something to watch. And then as we get closer to fall, the weather and how that impacts harvest and the duration of the application window is an important driver of demand.
[00:12:10] Amy Crozier:
I know when it comes to commodity prices and infant prices, there’s a lot of volatility and it’s hard to have an outlook. But when we’re looking forward into the fall, how is it looking. Margins have been tight on the farm. We’ve felt it ourselves on our own farm, and we’re always looking for someone else to fail in order to make ourselves profitable in one area or region, but hopefully that doesn’t happen. But what does it look like for margins on the farm? Are farmers doing well right now? Are things really tight? What’s the market outlook when you’re thinking about the margins per acre on the farm in general?
[00:12:38] Jason Newton:
We’ve seen over the last probably three years that we’ve been in a relatively tight crop margin scenario for most of the major crops in North America. I think we’ve seen, as I mentioned over the last number of weeks, that we’ve seen improvement in crop prices in this weather market that we’re in, which may provide some pricing opportunities. And we have over $5 per bushel corn, contract highs over $12 for November. Soybeans, over $800 canola. It’s a market environment that’s, I think, more positive than we’ve seen in some time. Now, whether that’s sustained or not will probably depend on what happens from a crop condition perspective going forward. But I think the difference today versus what we’ve seen over the last couple of years is a little bit of optimism regarding the outlook. And that’s driven by the developing El Nino and potential weather issues that come from that.
[00:13:28] Jason Newton:
And tightening supply demand balances projected. USDA is projecting that today, even with trend yields assumed for the most part. And then the demand side, I think there’s positive demand fundamentals. We’ve seen really strong demand and strong prospects from a biofuel perspective that would add incremental support. We’ve had three consecutive years of tightening, and I think the outlook is probably more optimistic today than it would’ve been a year ago at the same time, given some of those dynamics.
[00:13:54] Amy Crozier:
With everything you talked about today, what do you wanna leave the listeners with? What should they be watching out for? What are you watching out for?
[00:14:01] Jason Newton:
We’re in a really dynamic market environment. There’s a lot of geopolitics as there was in March when we spoke last. We still have uncertainty around the situation in the Middle East, which is such an important region for both energy and fertilizer production and trade and raw material trade. We also have the situation between Russia and Ukraine, which is escalating, uh, have seen disruptions to grain shipments, uh, have seen drone attacks that have impacted nitrogen production there. That’s an area where there could be volatility as well. It’s a matter of keeping track of what’s happening around the world, the impacts that it could have on crop production and trade or fertilizer production and trade, and being nimble in terms of making decisions on fertilizer purchases and marketing decisions from a crop perspective.
[00:14:51] Amy Crozier:
Is there anything else that we haven’t covered today that you would like to leave us with?
[00:14:54] Jason Newton:
I think that a couple of things to watch for, and it’s tough from an analytical perspective to really quantify, but is the impacts globally of some of the nutrient cutbacks that we’ve seen, especially seen phosphate and potentially some nitrogen as a result of the supply challenges over the past number of months. Combine that with some of the weather stresses that we’re seeing, and there could be yield impacts that are difficult to predict at this point in the year. We also know there’s a lot of disease development, and we see that here in Western Canada, in the US Midwest as well. The conditions have been favorable for disease development. The combination of those two factors could have yield impacts beyond the weather or something to watch.
[00:15:33] Amy Crozier:
Jason, thank you very much for joining us today. It’s always nice having a commodity and input update. Thanks for coming out to Egg in Motion. It’s a pretty exciting show. And to our listeners, thanks for tuning in this week. To learn more about what we talked about today, tune into nutrient-economics with a K.com.
[00:15:51] The Dirt PodKast:
Farming isn’t farming without questions, and now there’s a place to go for answers. At Economics, an entire team of agronomists are ready and waiting to help for free. No question is too big or too small. Visit nutrient-economicswik.com and submit your question with the ask an agronomist feature. What role does sulfur play in forage and pastures?
[00:16:18] Lyle Cowell:
Sulfur on forages. Forages can be such an important crop and have such a huge demand for nutrients. And we’ve removed so many pounds of nutrients, NP, K and S, and other nutrients when we harvest, especially when we harvest hay or silage or straw. When we’re removing that entire plant from the field, we are removing a lot of nutrients. Now, the question’s about sulfur. And of course, when we remove the entire crop for harvesting the whole crop as hay, silage, or as straw for bedding, then we remove a lot of sulfur. That’s a big deal. You can use soil tests to predict sulfur responses to some degree, and you can use those as a tool to try help you predict responses. The problem with soil tests and forages is that forages tend to accumulate most of the nutrients into the forage stand itself. When you soil test a forage stand, it’s usually tests pretty low in all nutrients.
[00:17:13] Lyle Cowell:
Then it gets a little bit hard to predict response. I often tell farmers the best soil test for a forage crop is to apply some fertilizer. If you think that a forage crop might be deficient in sulfur, then get some ammonium sulfate or ammonium thiosulfate, a good sulfur source that’s readily available, and apply a strip or two across the field. And you’ll pretty quickly start to see that forage crop green up if you do have a response to sulfur. It seems simplistic, but that’s a simple tool to use to understand if you’re going to get a response. And the response can be very significant. It can be significant in terms of yield and in quality to the forages. And those that graze the crop that feed on the crop, be it cattle or other animal species, they want palatable, nutritious forage to feed on. And if it’s deficient in a specific nutrient, they won’t eat as much.
[00:18:11] Lyle Cowell:
There won’t be as much to eat, and they will not want to eat it as much. It’s just not as palatable to the animal. Ensuring that we have a sufficient supply of all nutrients, and this includes sulfur, is very important. Probably the one other factor that we have to consider is that we very often seed forages on land that is probably more prone to sulfur deficiency. Here, and probably in most regions, a lot of forage land is on somewhat marginal soil. Sandier soil, lower organic matter soil that might be more sulfur deficient. We have a crop with a high demand for sulfur and other nutrients, and a soil that is less likely to be able to supply those nutrients. In the end, keep an eye on it. It’s a very important essential nutrient to all crops, and in particular for your forage crop.
[00:19:00] The Dirt PodKast:
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